Facebook has signed a deal to acquire its biggest potential competitor in free online photo sharing, Instagram, for approximately a billion dollars.
Since being founded in March 2010, the Instagram start-up has enjoyed limited profits and employs just 13 staff but has attracted some 30 million users from around the world. Interestingly, the Wall Street Journal reported YouTube also had 13 employees when it was acquired by Google for 1.65 billion in 2006, making it the last VC-backed company with as few employees as Instagram to be acquired for $1 billion.
The newly-announced acquisition is the largest yet for the Facebook, which now owns the free Instagram smartphone app that allows people to create, edit and share Polaroid style photos online.
Facebook founder Mark Zuckerberg and Instagram co-founder and CEO Kevin Systrom have both welcomed the move, assuring Instragram fans the merger will allow each program to “build” upon one another but remain independent.
“We’re committed to building and growing Instagram independently. Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people,” Zuckerberg said.
The young entrepreneur has promised that Instagram will still connect to other social networks, like Twitter, despite these being in competition to Facebook. Zuckerberg said this is an “important part of the experience” and he has no plans to stop users from having followers independently to their Facebook accounts.
In his Facebook post, Zuckerberg also said it was unlikely Facebook would look at any further mergers with products that already have so many users.
“We don’t plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together,” he said.
Zuckerberg said the Instagram staff would be joining the team at Facebook.